Retention Fee

nekr0mantik

Hello

So the solicitor I chose has been recommended to me by 2 colleague and have good reviews online.

They are not cheapest but dont do fixed fee purchases and so want to charge £450plus VAT for retention on leasehold purchase.

I find this to be VERY over priced. I know its meant to protect me in case vendor has not paid full service charge or ground rent since owning the property but do people think this is a fare price?

I have got quotes from others who do fixed fees so dont have this but they have slightly more expensive legal fees compared to one I gone with (not yet signed contract to start any work yet) but mine has more expensive fees for things like searches and leasehold fee etc rather then other ones who also do no completion no fee but mine dont.

If I add the 450 to the legal fees cost then price comes up similar to the others who had fixed fee but still seems like a lot.

eddddy

How much is the retention? Often it's only £250 or maybe £500.

Obviously, it's not worth spending £450+vat = £540 in legal fees to arrange a retention of £250/£500.

It would be cheaper to just pay the extra service charge - and not bother claiming it from the seller.


FWIW, the Standard Conditions of Sale normally still say that you can claim any service charge underpayment from the seller - even if you don't have a retention.

It's just that without the retention, it might be harder work to get the seller to pay. Ultimately, you might have to take them to court.

nekr0mantik

eddddy said:

How much is the retention? Often it's only £250 or maybe £500.

Obviously, it's not worth spending £450+vat = £540 in legal fees to arrange a retention of £250/£500.

It would be cheaper to just pay the extra service charge - and not bother claiming it from the seller.


FWIW, the Standard Conditions of Sale normally still say that you can claim any service charge underpayment from the seller - even if you don't have a retention.

It's just that without the retention, it might be harder work to get the seller to pay. Ultimately, you might have to take them to court.

Yeah its £450+VAT they said.

But we dont know how much if any is outstanding. If its like £800+ outstanding then yeah might be worth it but otherwise not.

I might see if I can get them to just ask the leaseholder to give the accounts to them to see if any outstanding and if there is then I can either pay the fee or just pay it myself if lower then fee. The retention fee is not in my quote but its just listed in the terms and conditions along with other fees like lease extension etc which dont apply.

eddddy

nekr0mantik said:

I might see if I can get them to just ask the leaseholder to give the accounts to them to see if any outstanding and if there is then I can either pay the fee or just pay it myself if lower then fee. 

I'm not sure you'd get a helpful or reliable answer to that question.

The way service charges work are:

• At the start of the year, the management company estimate all the bills they'll have to pay during the year - like insurance, electricity, repairs, gardening, management etc - and add them all up

• Let's say they estimate the total bills will be £15,000 and there are 10 flats - so each flat is required to pay £1500 as their service charge estimate

• At the end of the year - the management company add up all the actual bills to get the real figure

• If the real figure is £13,000 (= £1,300 per flat) then each flat owner gets a rebate of £200. If the real figure is £16,500 (= £1,650 per flat) then each flat owner owes an extra £150

I doubt that the management company will review and re-calculate all their estimates part way through the year just for your benefit.

nekr0mantik

eddddy said:

nekr0mantik said:

I might see if I can get them to just ask the leaseholder to give the accounts to them to see if any outstanding and if there is then I can either pay the fee or just pay it myself if lower then fee. 

I'm not sure you'd get a helpful or reliable answer to that question.

The way service charges work are:

• At the start of the year, the management company estimate all the bills they'll have to pay during the year - like insurance, electricity, repairs, gardening, management etc - and add them all up

• Let's say they estimate the total bills will be £15,000 and there are 10 flats - so each flat is required to pay £1500 as their service charge estimate

• At the end of the year - the management company add up all the actual bills to get the real figure

• If the real figure is £13,000 (= £1,300 per flat) then each flat owner gets a rebate of £200. If the real figure is £16,500 (= £1,650 per flat) then each flat owner owes an extra £150

I doubt that the management company will review and re-calculate all their estimates part way through the year just for your benefit.

Yes I know that about the current year but it was more about prior years and any outstanding debt due that the management company should know about.